A report prepared for the ASME Strategic Issues Committee, Strategic Management Sector June 30, 2009.
Executive Summary
The 21st century can be characterized as an age of extreme inequities. In 2007, the two richest people in the world had more money than the combined GDP of the 45 poorest countries. Total consumption of coal, oil and gas has doubled since the early 1970s and electrical generation from all sources has nearly tripled – yet more than 1.5 billion people worldwide still live without electricity. Historically, we live in a period of unprecedented technological sophistication, yet nearly a billion people entered the 21st century unable to read a book or sign their names.
Nearly half the world’s population lives in acute poverty. Worldwide, over four billion people form the “base of the economic pyramid” (BoP), a term coined to represent those earning less than $4 per day ($3,000 per person/year in local purchasing power). While individual incomes of BoP consumers are low, however, in aggregate they have a cumulative buying power of $5 trillion.
The 2008 ASME global summit environmental scan report, the Future of Mechanical Engineering, estimated that in the next twenty years globalization and new business models will shift the world’s attention to BoP markets. Renewed civic and economic interest will increasingly drive the development of engineering projects that serve the BoP, primarily in the developing countries of Asia, Africa and Latin America. Engineers are likely to be called upon to devise cost effective ways to increase access to food and clean water, effective sanitation, energy, education, health care, revenue-generating activities, and affordable transportation. ASME’s Strategic Issues Committee chose to commission this year’s environmental scan to:
• Understand the forces driving the BoP market generally and engineering solutions specifically
• Identify the products, business models and principles that are effectively serving the BoP market
• Identify potential ways ASME could engage in the BoP either directly or by offering services for its members.
Chapter 1 of this report provides an overview of the BoP market, including data on the size of the BoP population, the economic value they generate and the market characteristics and dynamics of the BoP. The section also identifies key driving forces impacting the BoP market: globalization, micro-finance, mobile phones, renewable, off-grid energy, social entrepreneurship, corporate social responsibility, and new models of innovation.
Chapter 2 presents examples and case studies of innovative technology and engineering solutions for the BoP in key market sectors including housing, energy, water, health, transportation, food and communications technology.
Chapter 3 looks at new models of engagement for the BoP market. It provides a review of how both private and public sector enterprises are participating in the base of the pyramid. In addition, it reviews the emerging set of best practices around Business Strategies and Design Principles which organizations can model when engaging in BoP activities. This report surveys and identifies five core design principles for the BoP.
Chapter 4 considers opportunities for ASME, concluding that there is a strong alignment of Engineering Solutions for the Base of the Pyramid with ASME’s Vision and strategic priorities. Given such congruence, high level opportunities that ASME might choose to participate are suggested. Opportunities were formed by applying ASME’s core assets, capabilities, and strategic priorities to BoP market needs. Options for pursuing these opportunities were grouped by their distance from current ASME products, services, and markets. High-level opportunities are grouped in three options: Low Hanging Fruit, Strategic Impact, and Big Bets.
| Click on any of the following categories for resources and web links on the BoP: |
For a full copy of this report, please refer to the ASME "Members Only" Website.
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